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Apple risks marginalization if post-smartphone strategy fizzles

Apple is feeling the pressure to extend its expertise into new product categories as smartphone sales slow, with augmented reality headsets and even connected cars at the top of the list of  where it hopes to make a mark next.   

Apple is coming out with a smart watch this spring with the hopes of cracking open a new revenue source and, if reports are correct, has an augmented reality headset and connected cars on its radar as well. These moves come as handset manufacturers look to position themselves as a major provider for all connected devices. 

?Smartphone growth is slowing and the big CE vendors are looking elsewhere for the next opportunity,? said Nick Spencer, London-based senior practice director for mobile devices and wearables at ABI Research. ?Also, connectivity is getting pervasive and therefore is huge part of modern life. 

?All the CE vendors want to be the key provider of the connected experience across form factors; smartphones, wearables, TVs, then cars and then the home are the next frontiers and any player not well positioned in all of these will start to become a marginal player,? he said.  

Looking ahead
Apple may be raking in the dough right now thanks to strong smartphone sales, but as adoption begins to reach saturation levels, sales will continue to slow down.

At the same time, demand is beginning to take off for an ever-growing list of connected devices and Apple does not want to be left out of the party. 

Apple reportedly recently won patent approval for a head-mounted display that would leverage augmented reality and enable users to insert an iPhone to view media. 

While a headset sounds somewhat in Apple?s wheelhouse, it is not clear yet how much demand there will be for a product such as this. 

There is also growing speculation that Apple could begin making cars soon, with the expectation that the company would make a connected car. This is based on reports that Apple has been busily hiring car engineers. 

The connected car market is growing quickly, with the global market expected to reach $131.9 billion by 2019, with a compound annual growth rate of 34.7 percent between 2013 and 2019, according to a new report from Transparency Market Research. 

The right partnerships
With previous efforts such as Apple TV failing to stoke significant consumer interest, a connected car strategy could similarly face a challenge convincing consumers that Apple has enough expertise to warrant plunking down thousands of dollars. 

It may make sense for Apple to try to partner with a car company if it truly wants to move in this direction. However, whether any of the car manufacturers would be interested is unclear. 

?It is a challenge though and moving into an already established category like cars is problematic and could over stretch the brand, i.e. end users tend to like going with the brands who have a long established core competency and have optimized their products over many years,? Mr. Spencer said.

?My recommendation would be a partnership approach, but the big car manufacturers are reluctant to give up on the connected opportunity themselves,? he said. 

?CE vendors will need to bring in expertise in these categories to ensure they do the basics right and don?t get egg on their faces. This could be through acquisition of talent or companies and IP. Apple isn?t short of cash of course.?

Final Take
Chantal Tode is senior editor on Mobile Marketer, New York